Thursday, April 27, 2006

Darn That Thing

Lynn Swann went before a group of retirees in Camp Hill the other day and promised a tax relief plan that would cap property taxes as long as people owned their homes.

No can do, according to the experts, because it violates the state's Uniformity Clause.

It may be obscure to most citizens, but policy wonks, pols and tax lawyers have it tattooed inside their skulls -- Article VIII , Section 1 of the Pennsylvania Constitution. It states that:

"All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws. "

It's the reason Pennsylvania has a flat income tax.

In the 1970's, when Gov. Milton J. Shapp enacted the state's first income tax, it was graduated -- i.e. the rate varied according to income. The state Supreme Court slapped him down. Shapp had to go back to the legislature and fight the fight again, this time to get a flat tax.

That's the most famous case, but there are volumes of case law on the clause, which date back to the 19th Century.

Why would capping property taxes violate this clause?

Example: Your house is assessed at $100,000 and you pay $2,500 a year in taxes. A neighbor across town has a house assessed at $100,000 and pays the same tax.

Over the years, though, your house greatly increases in value, while his house hardly increases in value at all. Yet, you both still pay $2,500.

Hmmm. That's not uniform.

Final question: Who the heck is advising Swann that he would advance such an idea?

I actually kind of like the idea. California's had pretty much the same system for a couple decades in the form of Proposition 13.

If a law like this were in effect in Philadelphia, long-time residents of improving neighborhoods would have very little reason to complain of being forced out of their neighborhoods by "gentrifiers" and could sell whenever they're ready instead of when they can no longer afford the taxes.